There have been a couple of follow-on stories in the Independent by Charlie Weston about the EBS decision to redline apartments outside of the cities (here and here). Weston suggests that the decision to redline apartments has been taken due to a feeling that there is excessive oversupply in areas outside of the principal cities and their hinterlands and they therefore represent a particularly risky investment. Unfortunately there is excessive supply of all kinds of housing just about everywhere, so its still not clear why apartments are singled out. The lack of any documented evidence-base to back up the claim is, I think, troubling.
I thought I’d have a look at apartments built in the Jan 2006 to April 2010 period (the stock most likely to be available to the market). For context, in April 2006, there were 139,872 apartments/flats in the state according to the Census (9.5% of stock). Almost 58% of these were within Dublin alone. According to the DEHLG/ESB house completion data, from Jan 2006 to April 2010 57,032 apartments were built constituting 22.6% of stock built (there is 4 month overlap in these figures at the beginning of 2006), meaning there’s c. 185,000 apartments in the state. Crudely portioning counties and boroughs into categories of ‘principal cities’ (Dublin, Cork, Limerick and Galway) and ‘rural/non-principal cities’ (see Figure), it is clear that c.80 percent of all apartments (c. 45,309 units) were built in the principal cities and their hinterlands, and c.20 percent were built elsewhere (c. 11,723 units). More importantly, of the 120,043 units of all types built in rural/non-principal cities only 9.7% of the 06-10 stock were apartments, whereas in the principal cities, apartments represented 34.4% of overall new stock. What this tends to suggest is that, although apartments are likely to be in oversupply everywhere, the oversupply is perhaps more pronounced in the principal cities and their hinterlands as it seems unlikely that 1 in 3 of new purchasers will want to buy a new apartment. In other words, perhaps there is a case for the redlining to be abandoned, turned completely on its head, or at least the redlining policy to be further explained. There certainly seems to be a case for a more geographical nuanced analysis than simply dividing the country into the four principal cities and everywhere else.
Apartments built between Jan 2006-Mar 2010 in principal cities and their hinterlands and elsewhere
Weston also reports that EBS are being encouraged to tighten their lending criteria even further for first-time buyers, a group that would have typically bought apartments, under direction from the financial regulator. It was felt that the society was lending too much, especially to those on lower incomes.
Rob Kitchin
Ireland after NAMA 
June 17, 2010 at 8:31 am
Interesting evidence, Rob.
But I think our analysis needs to be sociologically as well as geographically nuanced! We need to think about – and provide evidence for – what kinds of people want to live in apartments as opposed to other kinds of dwellings.
I suspect the EBS decision makers are assuming that apartments are generally occupied by single-person or couple/no children households, and that people at these family life stages are more likely to want to live in metropolitan areas. That seems plausible to me on the face of things. In our ‘New Urban Living’ study we did find some evidence of increasing proportions of couple/no children households in outer suburban areas. But it seems likely that most of these households were ‘pre-family,’ in the sense that they intended to have children in the near future, in which case I think it is plausible that their preference would be for a house over an apartment. And of course this doesn’t tell us anything about more rural areas.
But I’m betting that, whatever about the proportion they make up in the oversupply, ‘ghost’ apartments in rural areas are likely to be the last to sell, ever!!
June 17, 2010 at 10:22 am
Jane, I agree that it is people at the early household formation stage that will want to occupy apartments, but the apartments outside the principal cities are still predominately in urban settlements. It is still town living, just not the four principal cities. That’s not to say that there are apartments in some very rural locations, but the majority of them are in quite sizable settlements where they make up part of a diversified stock. To rule out mortgages to all of these units regardless of the local setting is, I think, unjustifiable. I would think that apartments in towns such as Athlone, Sligo, Waterford, Kilkenny, Mullingar, Dundalk, etc do have some kind of future. It is the blanket nature of the redlining that I am objecting to.
June 17, 2010 at 2:36 pm
Irish land policy is in a mess and always has been. It has such important and far reaching ramifications yet the “government” has always messed it up rather than enabled a sensible policy framework.
There needs to be a radical review so that this latest mess does not recur. We are one of the least densely populated countries next door to one of the most densely populated. Perhaps a desire to keep out the English is partly to blame? We never attempted to regrow our wonderful forests, either. Lack of national awareness except the grievous hurt of 6 missing counties?